America Online 2011 Annual Report Download - page 23

Table of Contents
A failure to scale and adapt our existing technology architecture to manage the expansion of our offerings could adversely affect our business.
We expect to continue to expand our offerings to consumers, advertisers and publishers, whether through internal growth or through acquiring other
companies or assets. Expanding the amount and type of our offerings or integrating third-party technologies will require substantial expenditures to scale or
adapt our technology infrastructure. The technology architectures utilized for our consumer offerings and advertising services are highly complex and may not
provide satisfactory support as usage increases and products and services expand, change and become more complex in the future. We may make additional
changes to our architectures and systems to deliver our consumer offerings and services to advertisers and publishers, including moving to completely new
technology architectures and systems. Such changes may be challenging to implement and manage, may take time to test and deploy, may cause us to incur
substantial costs and may cause us to suffer data loss or delays or interruptions in service. These delays or interruptions in service may cause consumers,
advertisers and publishers to become dissatisfied with our offerings and could adversely affect our business.
Certain parts of our business and operations are experiencing expansion. If we fail to effectively manage our expansion, our business and operating
results could be harmed.
We have undertaken expansion in certain parts of our business in 2011, in particular Patch, growing from approximately 775 sites as of December 31,
2010 to 863 sites as of December 31, 2011. We also have approximately 1,410 Patch employees as of December 31, 2011. Additionally, since our acquisition
of The Huffington Post, The Huffington Post has expanded internationally and may continue to expand its operations in the near future. Such expansion has
placed, and will continue to place, demands on our management, operational, and financial infrastructure. If we do not continue to effectively manage our
expansion, the quality of our products and services could suffer, which could negatively affect our brand and operating results. To effectively manage this
expansion, we will need to continue to improve our operational, financial and management controls, including our reporting systems and compliance
procedures. These systems enhancements and improvements may require capital expenditures and management resources. Failure to implement these
improvements could hurt our ability to manage our expansion and our financial position.
One of the factors in the demand for our products and services is the success of our marketing campaigns, and there can be no assurance that our
promotional and other marketing campaigns will be successful or will generate interest in our products and services.
We invest in strategic and targeted marketing campaigns in order to inform consumers about the products and services we offer. In addition, a core goal
of our marketing efforts is to maintain and enhance the image of our brand and consumer perception of it. If we are unable to effectively use our resources to
market and influence consumer perception of our brand, interest in our products and services may decline, and our ability to grow our services and products
could be negatively impacted.
If we cannot effectively distribute our content, products and services, our ability to attract new consumers could be adversely affected.
As the behavior of internet consumers continues to change, distribution of our content, products and services via traditional methods (e.g., toolbars)
may become less effective, and new distribution strategies may need to be developed. Even if we are able to distribute our content, products and services
effectively, this does not assure that we will be able to attract new consumers.
Currently, an important distribution channel for AOL Properties is through our subscription access service. However, our access service subscriber base
has declined and is expected to continue to decline. This continued decline is likely to reduce the effectiveness of our subscription access service as a
distribution channel. If we are unable to grow organically by attracting new consumers directly to our content, products and services, we may
19